In a unanimous decision, a panel of judges with the First Circuit Court of Appeals on Wednesday rejected allegations by Judith Shaulis that pricing at Nordstrom Rack is deceptive to shoppers and worthy of damages because the original or “compare at” prices on tags are not legitimate by affirming a lower court’s dismissal of the case.
The appellate judges agreed with the lower court’s finding that Shaulis essentially failed to show how her alleged “induced purchase” based on a false discount went beyond the level of injury per se, as she never claimed to have not received her purchase or to have paid more for an item than it was worth.
“The flaw in Shaulis’ theory of injury — that the mere purchase of an item may constitute cognizable injury, regardless of the item’s specific qualities — is that it merges the alleged deception with the injury,” the judges wrote. “She identifies no objective injury traceable to the purchased item itself — for example, that the sweater was poorly made or that its materials were misrepresented. Such a purchase-as-injury claim collapses the [Massachusetts Supreme Judicial Court]’s required distinction between deception and injury by attempting to plead an assertion about a consumer’s disappointed expectations of value in place of an allegation of real economic loss.”
While the judges noted that Shaulis saw her loss as concrete since she no longer had the money she used to buy the sweater, they found that in essence, she received what she had bargained for.
Counsel for Shaulis, S. James Boumil, characterized the ruling as “absurd” and pointed out that the underlying court found Nordstrom’s compare at pricing is in violation of Massachusetts law, a finding that was not on appeal.
“We’ll be evaluating our options over the next week,” Boumil said.
Available courses of action for Shaulis include reconsideration by the First Circuit, reconsideration by a full panel of federal appellate judges, or a petition to the U.S. Supreme Court.
A Nordstrom spokeswoman said: “We are strongly committed to pricing integrity at Nordstrom Rack and providing transparency to our customers. We are pleased with the court’s ruling in this case.”
Shaulis launched the suit in late 2014 in a local Massachusetts court, but it was soon transferred to a federal court. The allegations surrounded a cardigan purchased earlier that year at Nordstrom Rack in Boston for $49.97, which was advertised on the price tag as having originally sold for $218, creating “77 percent worth of savings.”
Under Massachusetts state law (as well as many other states), a discounted item has to have sold for an advertised “compare at” price within the last 90 days. Shaulis argued that not only was the sweater not sold for $218 in that time frame, but that it was never sold for that price.
This is because Nordstrom Rack allegedly sells items made exclusively for sale in the off-price channel, meaning products like the sweater she purchased were never even intended to be sold at the purportedly original price.
Many other retailers with a large or dedicated off-price channel have been accused of similar manufacturing and pricing activities, including Michael Kors, J. Crew Group, Macy’s Inc. and Kohl’s Corp., to name a few.
Shaulis held that without the price comparison at Nordstrom Rack, she would not have purchased the sweater, and said showing a false discount is merely a tool used by the retailer to “mislead consumers about the quality of their items,” according to court records.
She sued for damages stemming from purchases by her and other Nordstrom Rack shoppers in Massachusetts that she argued would not have been made without the allegedly deceptive price tags, as well as a permanent injunction on the pricing practice.
For More, See: